Recent Developments in Patent Law

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Recent Developments in Patent LawKristen Jakobsen Osenga

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Recommended CitationJakobsen Osenga, Kristen (2009) "Recent Developments in Patent Law," Akron Intellectual Property Journal: Vol. 3 :Iss. 2 , Article 5.Available at: https://ideaexchange.uakron.edu/akronintellectualproperty/vol3/iss2/5

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RECENT DEVELOPMENTS IN PATENT LAW

Kristen Jakobsen Osenga

I. Introduction ....................................................................... 304II. Patentability Requirements ................................................ 304

A . §102 : ........................................................................... 305B . § 103 : ........................................................................... 306C . § 112 : ........................................................................... 308

III. Patent Prosecution Issues ................................................... 310A. Patent Enforcement Issues: Venue & Jurisdiction ..... 310B. Declaratory Judgment Jurisdiction: ............................ 311C. Jurisdiction over Foreign Patentees: ........................... 312

IV. Patent Enforcement Issues: Infringement ......................... 312A. Design Patent Infringement: ....................................... 312B. Joint Infringement: ...................................................... 313C. Transnational Infringement: ....................................... 313D. Claim Construction: .................................................... 314E. Doctrine of Equivalents: ............................................. 314F. Willful Infringement/Inducement to Infringe: ............ 315

V. Patent Enforcement Issues: Defenses ............................... 315A. Inequitable Conduct: ................................................... 315B. Patent Exhaustion: ...................................................... 316C. Erroneous Revival: ..................................................... 318

VI. Patent Enforcement Issues: Remedies .............................. 318A . Injunctions: ................................................................. 318B . D am ages: .................................................................... 320

VII. Patent Reform Legislation ................................................. 320

This article was prepared for and presented at the 2009 Richard C.Sughrue Symposium on Intellectual Property Law and Policy, held onMarch 9, 2009, at the University Of Akron School Of Law.'

* Associate Professor, University of Richmond School of Law.

1. To reflect recent court activity, this paper has been slightly modified from the onedistributed at the Symposium in March 2009.

1

Jakobsen Osenga: Recent Developments in Patent Law

Published by IdeaExchange@UAkron, 2009

AKRON INTELLECTUAL PROPERTY JOURNAL

I. INTRODUCTION

In the last year, the landscape of patent law was altered by courtopinions from the Supreme Court and U.S. Court of Appeals for theFederal Circuit, as well as in opinions rendered by the Board of PatentAppeals and Interferences (hereafter BPAI) at the United States Patentand Trademark Office. In addition, patent reform legislation wasintroduced that could have shaken up patent practice even further.Although none of the reform proposals were passed, revised versions ofthese legislative initiatives have already been introduced in 2009.2 Thisbrief write-up summarizes many (but by no means all) of the importantdevelopments in patent law in 2008 and early 2009.

II. PATENTABILITY REQUIREMENTS

§101: Patent eligible subject matter rose to the forefront in 2008with the en banc decision in In re Bilski. 3 In Bilski, the Federal Circuitoverturned the "useful, concrete, and tangible result ' 4 test for businessmethods and software inventions from State Street Bank and itsprogeny.5 In its place, the court set up a test that requires the inventionto be implemented by a particular machine or to involve a physicaltransformation.6 The Supreme Court recently granted certiorari and willhear the case next term.7 I am not hopeful that the Supreme Court willoverturn Bilski, so it is likely the practical applications and nuances ofthe "machine or transformation" test will continue to play out over thenext few years. Cases from the BPAI are already addressing the issue atan alarming rate. See for example, Ex parte Atkin, Ex parte Gutto, Exparte Barnes, and Ex parte Becker.8

2. See, e.g., Patent Reform Act 2009, S. 515, 111th Cong. §35 (2009), available athttp://www.opencongress.org/bill/I I 1-s515/text (the latest proposed patent reform act which passedout of the Senate Judiciary Committee April 3, 2009); Fish and Richardson P.C., Fish News: 2009Patent Reform Update, http://www.fr.com/news/articledetail.cfm?articleid=490&gclid=CKCh6sbgz5kCFQdN5QodzzTt5Q (last visited April 4, 2009) (for a summary of current action on thesebills).

3. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008).

4. Id. at 959.5. State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).6. In re Bilski, 545 F.3d at 960.7. Bilski v. Doll, No. 08-964,2009 U.S. LEXIS 4103 (U.S. June 1, 2009).8. See, e.g., Ex pare Atkin, B.P.A.. Appeal 2008-4352 (2009); Ex parte Gutta, B.P.A.i.

Appeal 2008-4352 (2009); Exparte Barnes, B.P.A.I. Appeal 2007-4114 (2009); Exparte Becker,B.P.A.I. 2008-2064 (2009) (BPAI decisions can be quickly accessed from the e-FOIPatent Officewebsite by searching for the case name (e.g., "Er Parte Atkin") in an internet search engine, such asGoogle).

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Further, this issue is extending beyond the business method andsoftware realm into other fields, such as medical diagnosis. Forexample, in Classen v. Biogen, the Federal Circuit's three-sentenceopinion affirmed the district court's finding of invalidity under § 101. 9 Inthe pending case Prometheus v. Mayo,' ° the district court found amethod of optimizing therapeutic efficacy by administering a particulardrug to a patient and then using the patient's metabolite level to adjustfuture drug doses, to be ineligible subject matter.1'

As the Bilski case was the sole topic for another panel at theRichard C. Sughrue Symposium, 12 I will leave this summary very brief,although I believe there is much more to say on the matter. 3

A. §102:

There is not much new on the anticipation/statutory bar front, butone interesting case relating to §102 this year is the Federal Circuit'sdecision in SRI Int'l, Inc. v. Internet Security Systems Inc.,14 where thecourt addressed what may be required for a "publication" on the Internet.Here, before the critical date, an inventor posted a paper on an FTPserver and sent an e-mail to a small group of people announcing thepresence of the paper.' 5 While the district court held this activity toconstitute a "publication" for purposes of §102, the Federal Circuitdisagreed.' 6 In particular, the court noted that there was no evidencethat, in 1997, a person skilled in the art could have gained access to theFTP server and navigated through a generic directory structure to obtainthe paper in question. 17 Further, the court found the paper had not been

9. Classen Immunotherapies, Inc. v. Biogen IDEC, 2008 U.S. App. LEXIS 25661 (Fed. Cir.Dec. 19, 2008).

10. Prometheus Labs. v. Mayo Collaborative Servs., No. 04cv1200 JAH(RBB), 2008 U.S.Dist. LEXIS 25062 (S.D. Cal. Mar. 28, 2008), appeal docketed, No. 2008-1403 (Fed. Cir. Jan. 222009).

11. Prometheus Labs., 2008 U.S. Dist. LEXIS 25062, at *14.12. Richard C. Sughrue Symposium on Intellectual Property Law and Policy at the University

of Akron School of Law (March 9, 2009) (other panels at the conference covered Egyptian Goddessand Bilski in more depth, and while very important, this paper does not extensively detail them).

13. In fact, I have written on this topic even before the Bilski opinion came out. See KristenOsenga, Ants, Elephant Guns, and Statutory Subject Matter, 39 ARIz. ST. L.J. 1087 (2007) (myarguments in that piece, namely that the courts and the Patent Office are using § 101 rejections asproxies for inquiries made more appropriately under other patentability requirements, remain timelytoday, and in fact are quite similar to arguments raised in some Supreme Court briefing).

14. SRI Int'l, v. Internet See. Sys., 511 F.3d 1186 (Fed. Cir. 2008).15. Seeid.atll90.16. Seeid.atl192.17. Seeid. atl197.

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catalogued or indexed in any meaningful way.' 8 Judge Moore dissented,stating that the court's previous line of cases required this in fact to beconsidered a publication.' 9

Another interesting case is Net Moneyin, Inc. v. Verisign, Inc.20 Inthis case, although a prior art reference disclosed all the elements of theclaim, the elements in the prior art reference were not arranged orcombined in the same way as in the claim; rather the elements weredisclosed in different embodiments. 21 The Federal Circuit reversed thedistrict court's finding of anticipation, holding that anticipation requiresmore than simply finding each element within a single prior artreference.22 The invention, which must be disclosed in the anticipatingreference, must include both the claimed elements and the claimedarrangement thereof.23 Due to the fact that neither embodiment in theprior art reference contained all the claimed elements in the claimed

24arrangement, there was no anticipation.

B. §103:

In 2008, the Federal Circuit fleshed out some of the implications ofthe 2007 Supreme Court case, KSR v. Teleflex KSR heightened thestandard for non-obviousness by allowing the combination of prior art inthe absence of a "teaching, motivation, or suggestion" to combine, thetest the Federal Circuit had been using.26 Now, after KSR, while a"teaching, motivation, or suggestion" to combine remains viable, it isnot necessary; obviousness can be found so long as it would have beenreasonable for a person having ordinary skill in the art to combine thepieces of prior art, such as in KSR, where previously known elements

27were combined without an overall change in function or performance.One of the most important cases on this issue is Muniauction, Inc.

v. Thomson Corp.28 Muniauction owned a patent directed towardsconducting municipal bond auctions over the Internet.29 A jury found

18. See id.19. See id. at 1201-02 (Moore, J., dissenting).20. Net Moneyin Inc. v. Verisign, Inc., 545 F.3d 1359 (Fed. Cir. 2008).21. Id. at 1370.

22. Id. at 1371.23. See id. at 1370.24. Seeid. at1371.25. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007).26. Id. at415.27. See id. at 422.28. Muniauction, Inc. v. Thompson Corp., 532 F.3d 1318 (Fed. Cir. 2008).29. Id. at 1321-22.

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Thomson liable for infringement of the patent and awarded Muniauction$77 million.30 Thomson appealed to the Federal Circuit, arguing thepatent was obvious, and the Federal Circuit agreed.31 The court firstnoted that the patent itself stated that internet technology and webbrowsers were conventional and well-known.3 2 The court then statedthat "adapting existing electronic processes to incorporate modeminternet and web browser technology was similarly commonplace" at thetime the patent application was filed. 3 Therefore, the combination wasobvious.34 Given this broad application of KSR, it is questionablewhether any electronic technology transformed for web-based use wouldbe found non-obvious. 5

Another important post-KSR case is Eisai v. Dr. Reddy's Labs. 36 Inthis case, the Federal Circuit explained that KSR will often not apply inchemical compound cases, even where the individual components of theclaimed compound are often previously known.37 "To the extent an artis unpredictable, as the chemical arts often are, KSR's focus on these'identified, predictable solutions' may present a difficult hurdle becausepotential solutions are less likely to be genuinely predictable". 38 Rather,for chemical cases, the prima facie case for obviousness begins with theidentification of a lead compound in the prior art.39 Then, obviousnesscan be based on the structural similarity between the lead compound andthe claimed compound, along with some motivation that would lead askilled artisan to make the modification. 40 Motivation can be shown bya close relationship between the prior art and the new compound thatwould make the substitution predictable.41

Obviousness in biotech cases is still up in the air following ExparteKubin from the BPAI.42 In Kubin, for which the Federal Circuit heard

30. Id. at 1321.31. Id. (rejecting the patent on grounds of obviousness).32. See id. at 1326.33. Id. at 1327.34. Id.35. See KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007).36. Esai Co. Ltd. V. Dr. Reddy's Labs., Ltd, 533 F.3d 1353 (Fed. Cir. 2008).37. See id. at 1356.38. Id. at 1358.39. See id. at 1358.40. See id. at 1357.41. See id.42. See, Ex Parte Kubin, B.P.A.I. Appeal No. 2007-0819 (2007).

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an oral argument in January 200943, the BPAI found a "nucleic acidmolecule" claim obvious over the prior art.44 Although the molecule'sstructure was not similar to other regulator proteins, and althoughprotein folding is an unpredictable art,4 the BPAI held the claimobvious because the molecule in question could have been isolated andverified using conventional techniques 46 - that is, it would have beenobvious to try.47 This argument of "obvious to try" had been previouslyrejected by the Federal Circuit in In re Deuel,48 but the BPAI held thatKSR limited Deuel and that the invention in this case was simply aproduct of "ordinary skill and common sense." 49 As this article wasgoing to press, the Federal Circuit decided In re Kubin and affirmed theBPAI's opinion. 0 The Federal Circuit's opinion resurrects the 'obviousto try' analysis, although an invention that is obvious to try is notnecessarily obvious. 5

' How this plays out in the ever-advancing field ofbiotechnology will be seen over the next few years.

C. §112:

There is not much new to report with respect to enablement, bestmode, or written description. The Federal Circuit continues to holdbroad claims invalid in the absence of sufficient support, either in theform of multiple embodiments or a single embodiment with enoughdetail supporting multiple configurations.12 See for example, In reAlonso, which found that in an unpredictable art (here treatingneurofibrosarcomas using antibody reagents) a single embodiment isinsufficient.1

3

Even in predictable electrical and mechanical arts, the FederalCircuit is requiring the full scope to be enabled by the specification to

43. Donald Zuhn, Kubin Panel Questions Motivation Behind Reversal in New Written DescriptionTraining Materials, PATENTDOCS, Jan. 8,2009, http'/www.patentdocs.orgi2009/01/kubin-panel-questions-moivation-behind-revesa-in-new-written-desption-ainmng-ntals.hmld.

44. See generally Ex Parte Kubin, B.P.A.I. Appeal No. 2007-0819 at *5, *7.45. Id. at *13 (molecular biology ... generally an unpredictable art).46. Id. at *5.47. See Ex Parte Kubin, B.P.A.I. Appeal No. 2007-0819 at *8.48. In re Deuel, 51 F.3d 1552, 1559 (Fed. Cir. 1995).49. ExParte Kubin, B.P.A.I. Appeal No. 2007-0819 at *9.50. See, In re Kubin, 561 F.3d 1351 (Fed. Cir. 2009) (the US Court of Appeals for the Federal

Circuit decided the case on April 3, 2009. The court of appeals indicated that the KSR standard forbiotechnology was not simply obviousness, but obvious to try. In making its decision, the Courtexpressly overruled Deuel).

51. Id.52. See, e.g., In re Alonso, 545 F.3d 1015, 1020 (Fed. Cir. 2008).53. Id.

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uphold validity.54 See for example, Sitrick v. Dreamworks, LLC.55 Inthis case, although the claim was broad enough to cover video gamesand movies, the specification only discussed video games. 56 Theevidence showed that movies were quite different from video games,and thus the court held the patent invalid for failure to enable the fullscope.

As far as claim definiteness under §112, the court issued a coupleopinions dealing with the propriety of functional language. InMicroprocessor Enhancement Corp. v. Texas Instruments Inc., theclaims at issue included both structural and functional language.58 Inparticular, claim 1 was written as follows:

A method of executing instructions in a pipelined processorcomprising:[structural limitations of processor];the method further comprising:[method steps implemented in the processor] .9

Despite the unconventional nature of the claim, 60 the FederalCircuit explained that the claim was not indefinite and was "clearlylimited to practicing the claimed method in a pipelined processorpossessing the requisite structure. ' 6 1

In Aristocrat Technologies Australia Pty Ltd., v. InternationalGame Technology, 62 the Federal Circuit dealt a blow, however, to usingfunctional claim language in computer apparatus systems. 63 The claimlanguage at issue was "game control means," 64 which falls under § 112,para. 6, "means plus function" analysis.65 The specification discussedonly that the means included a programmed general purpose computer.66

The court held that this was insufficient because "general purposecomputers can be programmed to perform very different tasks in very

54. See, e.g., Sitrick v. Dreamworks, LLC, 516 F.3d 993, 1000 (Fed. Cir. 2008).55. Sitrick v. Dreamworks, LLC, 516 F.3d 993(Fed. Cir. 2008).56. Id. at 1000.57. Id. at 998.58. Microprocessor Enhancement Corp. v. Texas Instruments Inc., 520 F.3d 1367 (Fed. Cir.

2008).59. Id. at 1374.60. U.S. Patent No. 5,471,593 (filed Jan. 21, 1994).61. Microprocessor Enhancement Corp., 520 F.3d at 1375.62. Aristocrat Techs. Austl. Pty Ltd. v. Int'l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).63. Id.64. Id. at 1335.65. 35 U.S.C. § 112 (1975).66. Aristocrat Techs. Austi. Pty Ltd., 521 F.3d at 1328-33.

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different ways," so "simply disclosing a computer as the structuredesignated to perform a particular function" does not provideappropriate limits on the patent's scope and is thus invalid.67

III. PATENT PROSECUTION ISSUES

No discussion of 2008 would be complete without a mention ofTafas v. Dudas68 (now captioned Tafas v. Dolff9), the enormous battleover whether the Patent Office has the power to implement substantiveprosecution rules with respect to continuation applications andlimitations on the number of claims. 70 Tafas complained that the PatentOffice had exceeded the rule-making authority it had been delegated byCongress.71 After imposing an injunction to keep the Patent Office fromimplementing the new rules, the District Court found the rules to besubstantive in nature and thus outside the scope of the Patent Office's

72power. The Patent Office appealed to the Federal Circuit andarguments were held in December 2008.7 3 It is unclear to what extent, ifat all, the new administration will pursue this case.

A. Patent Enforcement Issues: Venue & Jurisdiction

This year may have marked the end of the Eastern District ofTexas's reign as the hotbed of patent infringement cases. The FifthCircuit, in In re Volkswagen of America, Inc.,74 held that the judges inthe Eastern District of Texas must follow the federal change of venuestatute, 28 U.S.C. § 1404, when deciding motions to transfer cases.75 Inparticular, the district courts should no longer allow the plaintiffs choiceof forum to trump all other considerations, such as the location ofwitnesses and other matters of convenience.76

On this issue, the Federal Circuit follows the law of the circuit inwhich the district court resides and has adopted the same viewpoint asthe Volkswagen court. In TS Tech USA Corp., the Federal Circuit

67. Id. at 1333.68. Tafas v. Dudas, 541 F. Supp. 2d 805 (E.D. Va. 2008).69. Tafas v. Doll, 559 F.3d 1345 (Fed. Cir. 2009).70. Tafas v. Dudas, 541 F. Supp. 2d 805 (E.D. Va. 2008).71. Id. at811.72. Id. at 814.73. Audio of Oral Argument, Tafas, 541 F. Supp. 2d 805 (No. 2008-1352) available at

http://oralarguments.cafc.uscourts.gov/mp3/2008-1352.mp3.74. In re Volkswagon of Am., Inc., 545 F.3d 304 (5th Cir. 2008).75. Id. at 326.76. Id. at 315.

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responded to a petition for writ of mandamus by ordering a patent casetransferred out of the Eastern District of Texas.77 The Federal Circuitfound that while Texas was a proper venue, Ohio was a far moreappropriate venue, given the facts that the defendant company washeadquartered in Ohio; the witnesses were located in Ohio, Michigan,and Canada; the physical evidence was in Ohio; and the state of Texashad no connection or interest in the case.78

Between Volkswagen and TS Tech, patent infringement cases arestarting to be transferred out of the Eastern District of Texas. Justrecently, Judge Love of the Eastern District of Texas granted a motion totransfer in the case of Odom v. Microsoft,79 where the plaintiff waslocated in Oregon, the defendant was located in Washington, the conductand contracts giving rise to the case occurred in the Pacific Northwest,and Texas had no particular interest in the case.80

B. Declaratory Judgment Jurisdiction:

In the Medlmmune, Inc. v. Genentech, Inc.81 case from 2007, theSupreme Court rejected the Federal Circuit's previous test fordeclaratory judgment (DJ) jurisdiction, namely that the DJ plaintiff has(1) a reasonable apprehension of suit and (2) has conducted meaningfulpreparation towards infringing activity.12 While MedImmune got rid ofthe first prong of the test, it apparently left the second prong intact.8 3

This year, the Federal Circuit has given us a broader test for DJjurisdiction in Cat Tech LLC v. Tubemaster, Inc.84 The proper inquirynow is whether the totality of the circumstances shows there is asubstantial controversy between parties having adverse interests ofsufficient reality and immediacy to require DJ. 5 Meaningfulpreparation is important, but not required, to show immediacy andreality.

86

77. See In re TS Tech. USA Corp., 551 F.3d 1315 (Fed. Cir. 2008).78. Id. at 1320-23.79. Odom v. Microsoft Corp., No. 6:08-CV-331, 2009 U.S. Dist. LEXIS 9835, at *2 (E.D.

Tex. Jan. 30, 2009).80. Odom, 2009 U.S. Dist. LEXIS 9835, at * 22-23.81. See generally MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).82. Id. at 132.83. See generally MedImmune Inc., 549 U.S. at 129-37.84. Cat Tech LLC v. Tubemaster, Inc., 528 F.3d 871 (Fed. Cir. 2008).85. Id. at 879 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)).86. Id.

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C. Jurisdiction over Foreign Patentees:

In Avocent Huntsville Corp. v. Aten International Co., Ltd., theFederal Circuit held that a district court lacked jurisdiction over aforeign patentee in a declaratory judgment action.87 For specificjurisdiction to attach in DJ cases, a court must determine whether theclaim arises out of or relates to the DJ defendant's contacts with theforum state.88 The Federal Circuit has repeatedly held that a threat letteralone is insufficient to create DJ jurisdiction and that there must be otheractivities related to the claim in the forum.89 Here, the DJ plaintiffasserted there was jurisdiction based on an infringement letter mailedfrom Aten (a Taiwanese corporation) to Avocent (in Alabama);distribution of Aten products in Alabama by a subsidiary; and previouspatent enforcement litigation by Aten in other fora.90 The FederalCircuit held that the previous patent enforcement was not relevant to thiscase or fora and that the distribution of a product by the patentee was notrelated to the DJ claim that the patent at issue was invalid and notinfringed by Avocent. 91 Thus, there was no personal jurisdiction overAten.92

IV. PATENT ENFORCEMENT ISSUES: INFRINGEMENT

A. Design Patent Infringement:

The Federal Circuit altered the analysis for finding infringement ofdesign patents in its en banc decision in Egyptian Goddess, Inc. v. Swisa,Inc. 93 This case, like Bilski, was the subject of another panel at theRichard C. Sughrue Symposium and therefore is not covered extensivelyin this paper.94 Simply noted, the court abolished the "point of novelty"prong of the infringement inquiry for design patents. 95

87. Avocent Huntsville Corp. v. Aten Int'l Co., Ltd., 552 F.3d 1324 (Fed. Cir. 2008).88. See, e.g., Breckenridge Pharm. Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1363 (Fed.

Cir. 2006).89. Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194 (Fed.Cir.2006) (quoting Red Wing

Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1359-60 (Fed.Cir.1998)).90. Id. at 1341.91. Id. at 1339-41.92. Id. at 1340.93. Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cit. 2008) (en banc).94. Richard C. Sughrue Symposium on Intellectual Property Law and Policy at the University

of Akron School of Law (March 9, 2009) (other panels at the conference covered Egyptian Goddessand Bilski in more depth, and while very important, this paper does not extensively detail them).

95. Egyptian Goddess, Inc., 543 F.3d at 683.

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B. Joint Infringement:

In Muniauction, Inc. v. Thomson Corp., 96 the Federal Circuit alsoaddressed the issue of infringement of a process patent, where all of thesteps are not performed by the same party.97 In that case, the auctionprocess included the steps of inputting data associated with a bid,automatically computing interest based on the inputted data, submittingthe bid by transferring over an electronic network, and communicating amessage associated with the bid, where at least one step is performedusing a web browser.98 The problem is that the first step, inputting a bid,is done by a user of the system, while the rest of the steps are performedby the defendant (Thomson), who provides the software and access tothe electronic network.99 The Federal Circuit held that there was noinfringement because there was no one party that performed every stepof the claimed process.'00 A petition for writ of certiorari in this casewas denied by the Supreme Court on March 9, 2009.101

C. Transnational Infringement:

Although patent law is generally limited to activity that occurs inthe United States, Congress has expanded the reach via §271(f), whichprohibits supplying components of a patented device to be assembledabroad, 10 2 and §271(g), which prohibits importation of products madeabroad using patented processes.10 3 While the Federal Circuit had ruledin 2005 (in the Union Carbide v. Shell case)1' 4 that §271(f) extends tocomponents used in a claim method, this holding was made tenuous bythe Supreme Court's decision in 2007 in Microsoft Corp. v. AT&TCorp., 1 5 which held that the shipment of golden master disks,containing patented processes in the form of software that were used forduplication abroad, did not fall under §271(f)'s purview. 10 6 However,this year, the Federal Circuit stated that the Supreme Court decision did

96. See Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1325-27 (Fed. Cir. 2008).97. See Id. at 1330.98. See Id. at 1322-23.99. See Id. at 1329.

100. Seeld. at 1330.101. Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), cert. denied, 129 S.

Ct. 1585 (2009).102. 35 U.S.C. §271(f) (1984).103. 35 U.S.C. §271(g) (1994).104. Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir.

2005).105. Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).106. Id. at 462.

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not alter the §271(f) analysis with respect to supplying actualcomponents used in patented processes (versus the golden master disks,which were copied onto the computer systems, and not themselvesactually used). 10 7 The defendant sought rehearing en banc to overturnUnion Carbide,10 8 and the petition was supported by some big-nameamici, such as AIPLA'0 9 and a group of tech companies includingMicrosoft, Intel, and Oracle." The en bane rehearing was granted"',and argument held May 29, 2009, at the Federal Circuit. l i E

D. Claim Construction:

Although there has been no big news in claim constructionjurisprudence this year, there have been many cases that point out thestill-remaining need for something better. For example, Outside the BoxInnovations, LLC v. Travel Caddy, Inc.113 involved a patent on a verystraightforward device - a bag used to store and carry tools such as usedby an electrician. In this case, a three-judge panel of the Federal Circuitcould not agree on the construction of the term "between.' 14

E. Doctrine of Equivalents:

Infringement under the Doctrine of Equivalents (DOE) continues tobe very difficult to prove. After Festo15 limited application of the DOEto amended claims only in cases of unforeseeability, tangentiality, orfailings of language, the court has shown repeatedly how these can bar a

107. Cardiac Pacemakers v. St. Jude Med., Inc., No. 2007-1296, No. 2007-1347, 2008 U.S.App. LEXIS 25475 (Fed. Cir. Dec. 18, 2008).

108. Cardiac Pacemakers v. St. Jude Med., Inc., No. 2007-1296, No. 2007-1347, 2009 U.S.App. LEXIS 4379 (Fed. Cir. March 6, 2009).

109. Brief of Amici Curiae Fed. Circuit Bar Ass'n & Am. Intellectual Prop. Law Ass'n inSupport of Cross-Appellants' Petition For Rehearing En Banc, Cardiac Pacemakers v. St. JudeMed., Inc., 2009 U.S. App. LEXIS 4379 (Fed. Cir. March 6, 2009) (No. 2007-1296, No. 2007-1347), available at http://www.patentlyo.com/fcba-aipla-amicus-brief.pdf.

110. Brief for Amici Curiae Cisco Systems, Inc., Intel Corp., Apple Inc., Oracle Corp.,Microsoft Corp., and Symantec Corp., in Suport of Cross-Appellants' Petition For Rehearing EnBanc, Cardiac Pacemakers v. St. Jude Med., Inc., 2009 U.S. App. LEXIS 4379 (Fed. Cir. March 6,2009) (No. 2007-1296, No. 2007-1347), available at http://www.patentlyo.com/cardiac-amicus-brief-01-30-09.pdf.

11l. Cardiac Pacemakers, 2009 U.S. App. LEXIS 4379, at *2.112. Audio of Oral Argument, Cardiac Pacemakers, Inc., 2009 U.S. App. LEXIS 4379 (No.

2007-1296-2) available at http://oralarguments.cafc.uscourts.gov/mp3/2007-1296-2.mp3.113. Outside the Box Innovations, LLC v. Travel Caddy, Inc., No. 2007-1253, 2008 U.S. App.

LEXIS 813, at *2 (Fed. Cit. Jan. 15, 2008).114. Outside the Box Innovations, LLC, 2008 U.S. App. LEXIS 813, at *10-11.115. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722 (2002).

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finding of infringement.' 16 In Honeywell Int'l, Inc. v. HamiltonSundstrand Corp.,"l7 the patentee argued that the accused infringer'sequivalent was not foreseeable." 8 The court disagreed, stating that"[f]oreseeability does not require that the accused infringing product orprocess be foreseeable, nor that any equivalents exist at the time; rather,foreseeability only requires that one of ordinary skill in the art wouldhave reasonably foreseen the proposed equivalent at the pertinenttime.""19

F. Willftl Infringement/Inducement to Infringe:

In Seagate, 20 the Federal Circuit made it more difficult to establishwillful infringement and obtain enhanced damages by removing the"affirmative duty of due care."'121 In Broadcom Corp. v. QualcommInc.,122 the defendant argued that it could not be liable for inducement toinfringe if it was not liable for willfulness under the Seagate standard. 23

The Federal Circuit rejected this argument, holding the inducementstandard had not changed and that inducement does not require a findingof willfulness. 124 Further, in finding the requisite intent for inducement(that the defendant "knew or should have known" that its action wouldcause direct infringement), the court held that advice of counsel (orfailure to procure this advice) was relevant to the inducement inquiry. 2 5

V. PATENT ENFORCEMENT ISSUES: DEFENSES

A. Inequitable Conduct:

This year saw the return of inequitable conduct, along with aheightened standard to keep it at bay. In Aventis Pharma S.A. v.Amphastar Pharmaceuticals, Inc.,126 a patent was held to beunenforceable due to inequitable conduct. 27 The behavior in question

116. Id. at 740.117. Honeywell Int'l, Inc. v. Hamilton Sundstrand Corp., 523 F.3d 1304 (Fed. Cir. 2008).118. Id. at 1311.119. Id. at 1314.120. In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).121. 1d. at 1371.122. Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683 (Fed. Cir. 2008).123. Id. at 699.124. Id.125. Id.126. Aventis Pharma S.A. v. Amphastar Pharmaceuticals, Inc., 525 F.3d 1334 (Fed. Cir. 2008).127. Id. at 1337.

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was the failure to include material information in a declaration submittedto the Patent Office, but the intent of the patentee to deceive the PatentOffice was shown only circumstantially at best. 28 Judge Rader, indissent, suggested the court take a closer look at the intent necessary tofind inequitable conduct, noting that "inequitable conduct has taken on anew life as a litigation tactic" and that it should be limited to "only themost extreme cases of fraud and deception."'129 A petition for writ ofcertiorari at the Supreme Court has recently been filed by the patentee. 30

The Federal Circuit followed up Aventis with Star Scientific, Inc. v.R.J. Reynolds Tobacco, Co.131 In this case, the Federal Circuit statedthat:

Just as it is inequitable to permit a patentee who obtained hispatent through deliberate misrepresentations or omissions ofmaterial information to enforce the patent against others, it isalso inequitable to strike down an entire patent where thepatentee only committed minor missteps or acted with minimalculpability or in good faith. 132

The court thus required the infringer to prove the prongs ofmateriality and deceptive intent with clear and convincing evidence andnoted that "inferences drawn from lesser evidence" will not satisfy therequirements.'

B. Patent Exhaustion:

Following 2007, a year that saw a great number of Supreme Courtcases in patent law, the primary Supreme Court patent case is QuantaComputer, Inc. v. LG Electronics, Inc. 134 LG owned patents relating tomethod and system claims. 35 LG licensed these patents to Intel,granting Intel the right to make, use, and sell products covered by thepatent; however, the license included a limitation that no license wasgranted to third-parties to combine licensed technology with non-Intelequipment. 36 Intel also agreed to tell its customers that they had no

128. Id. at 1342.129. Id. at 1349 (Rader, J., dissenting).130. Aventis Pharma S.A. v. Amphastar Pharm. Inc, 525 F.3d 1334 (Fed. Cir. 2008).131. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008).132. Id. at 1366.133. Id.134. Quanta Computer, Inc. v. LG Electronics, Inc., 128 S.Ct. 2109 (2008).135. Id. at2113.136. Id. at2114.

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license to combine the Intel products with any other non-Intel parts. 137

Quanta, a third-party, had purchased Intel's chips and combined themwith other technology. LG sued Quanta for patent infringement. 38

The District Court held that the license agreement between LG andIntel exhausted the patent right and there was no infringement.1 39 TheFederal Circuit reversed on two grounds: first, method claims could notbe exhausted, and second, the license was conditional, and therefore, notexhausted. 140 The Supreme Court heard the case and ultimatelydetermined that the patents were indeed exhausted and Quanta did notinfringe.

141

The Supreme Court's reasoning is as follows: the basic principle ofpatent exhaustion is that an authorized sale of a patented item ends anypatent rights with respect to that item. 141 In fact, any item that"sufficiently embodies the patent - even if it does not completelypractice the patent - such that its only and intended use is to be finishedunder the terms of the patent" will invoke patent exhaustion. 43 TheCourt next reasoned that patent exhaustion can apply to method claims,although sale of a patented product is not necessarily a sale of amethod.' 44

Applying this reasoning to Quanta, the Court concluded that Intel'sparts were capable of use only in practicing LG's patents, and therelevant consideration is whether the products embody the patent'sessential features. 145 The Court then determined that the products soldby Intel were licensed, but that this license did not restrict use of theproducts by Intel - the first license was thus unconditional. 46 Intel waslicensed to make the products, and Intel was licensed to sell the productsto Quanta. 147 Any further restrictions on Quanta (or any other thirdparty) were not relevant to the inquiry of exhaustion. 148

So what is important about this case? Patent exhaustion can applyto method claims as well as apparatus claims. Additionally, patent

137. Id.138. Id.139. Id.140. Id. at2115.141. Id. at2122.142. Id. at2115.143. Id. at 2117.144. Id.145. Id. at 2119.146. Id. at2122.147. Id.148. Id. at2122.

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exhaustion can be avoided by careful license drafting. The conditionsand limitations must apply to the licensee, not to a third party, as was thecase here.

49

C. Erroneous Revival.

In Aristocrat Technologies Australia v. IGT, the Federal Circuitheld that improper revival of a patent application was not a defense topatent infringement. 150 The Patent Office did not have the authority torevive a national stage application that was unintentionally filed late, butit did revive the application and issue a patent based thereon. 5' Whenthe resulting patent was then asserted in litigation, the accused infringerargued the Patent Office's improper revival constituted a defense ofinvalidity. 5 2 The Federal Circuit, looking to §282, held there was nosuch defense.' 53 This section of the Patent Act allows for the followingdefenses to allegations of patent infringement: non-infringement,invalidity based on conditions of patentability (defined by the court asutility, novelty, and non-obviousness), invalidity based on failure tocomply with sections 112 or 251, or any other fact or act made a defenseby the act.154 Thus, there is no recourse for an accused infringer toinvalidate a patent based on procedural lapses by the Patent Office. 55

VI. PATENT ENFORCEMENT ISSUES: REMEDIES

A. Injunctions:

In 2008, we also got a better idea of how the Federal Circuit isgoing to apply the four-factor test for injunctive relief that the SupremeCourt required in eBay Inc. v. MercExchange, L.L.C.156 For example,consider Voda v. Cordis Corp.57 In this case, a jury found Cordis liablefor patent infringement and awarded damages, but the district courtdenied entry of a permanent injunction.1 58 On appeal to the Federal

149. See id.150. Aristocrat Techs. Austl. Pty Ltd. v. Int'l Game Tech., 543 F.3d 657 (Fed. Cir. 2008).

151. Id. at 660.

152. Id. at 662.

153. Id. at 663.

154. 35 U.S.C. §112 (2007); 35 U.S.C. §251 (2007).155. See, e.g., Magnivision, Inc. v. Bonneau Co., 115 F.3d 956, 960 (Fed. Cir. 1997)

("Procedural lapses during examination, should they occur, do not provide grounds of invalidity.").156. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).157. Voda v. Cordis Corp., 536 F.3d 1311 (Fed. Cir. 2008).

158. Id. at 1315.

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Circuit, the court affirmed the denial of injunction because the patentowner had exclusively licensed the patent to a third party.159 Since thepatent owner himself was not irreparably injured (even if the exclusivelicensee may be), the court held that damages were sufficient to makethe patentee whole.16

0

Licensing by the patentee, however, is not fatal. In Acumed LLC v.Stryker Corp., 161 the court upheld the entry of a permanent injunction,despite the fact that the patentee had previously licensed the patent toother manufacturers.1 62 The District Court had found that these priorlicenses did not defeat the requirement of irreparable harm because theprevious licensees were not direct competitors. 63 The Federal Circuitnoted that the "plaintiff's past willingness to license its patent is notsufficient per se to establish lack of irreparable harm if a new infringerwere licensed."'164

One of the main questions after eBay'65 was how non-practicingpatent-holding entities (NPEs) would be treated. In Broadcom v.Qualcomm, the court provided some insight.166 In this case, Broadcomwas a quasi-NPE, in that it was not making or selling the inventionclaimed in the asserted patents; it was, however, a competitor ofQualcomm based on an alternative chipset167 This permitted the courtto find irreparable harm. 68 Also interesting, is how the district courtcrafted the injunction to suit both the patentee and the public interest. 69

The injunction order contained a sunset provision that allowedQualcomm to continue infringing for twenty months while paying acompulsory license, after which time it must cease infringingaltogether. 170 This, the court reasoned, would allow Qualcomm toredesign and retool without interrupting service to its customers. 171 It isnot clear, however, how the courts will treat NPE's that do not competeon some level, such as patent holding companies or "patent trolls."

159. Id.

160. Id. at 1329.161. Acumed LLC v. Stryker Corp., 551 F.3d 1323 (Fed. Cir. 2008).

162. Id. at 1332.

163. Id. at 1328.

164. Id.

165. 547 U.S. 388 (2006).166. See Broadcom Corp. v. Qualcomrn Inc., 543 F.3d 683 (Fed. Cir. 2008).167. See id. at 702.168. See id. at 703.169. Seeid. at701.170. Seeid.171. See id.

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B. Damages:

Damages are likely to be a hot issue in 2009, both in the courts andin the legislature. Congress is contemplating damage apportionment aspart of patent reform, and the courts are seeing the issue turn political aswell.'72 In particular, keep an eye on Lucent Technologies, Inc. v.Gateway, Inc., on appeal at the Federal Circuit, with the argumentexpected to be scheduled either late spring or early summer. 73 In thatcase, some $500 million in damages were awarded, even though only aportion of the accused device was infringing. 174 This case has turnedinto a prime exhibit in the Congressional debate about damages.' 7 Inany case, expect at least a lively debate about damages, if not wholesalechange, in the coming year.

VII. PATENT REFORM LEGISLATION

Without a crystal ball, it is difficult to see what will happen withpatent reform legislation in the new year. Certainly, a number of peopleare hopeful that the new administration will push forward, particularlygiven President Obama's Technology Agenda that calls for reformingthe patent system to improve patent quality, and reduce uncertainty andwaste. 76 However, during a time when there are certainly more pressingneeds, patent reform may need to take a back seat for a while. Some hot(and controversial) issues in patent reform include legislation to exemptinfringement of tax strategy patents by tax practitioners (similar to themedical treatment exception), damages apportionment, and expandedinterlocutory appeals of claim construction rulings. 177 Other lesscontroversial measures include harmonizing procedures, such as first-to-

172. See, e.g., Dennis Crouch, Patent Reform 2009: Damages, Patent Reform Contemplation,PATENTLYO, March 3, 2009, http://www.patentlyo.com/patent/2009/03/patent-reform-2009-damages.html.

173. Lucent Techs., Inc. v. Gateway, Inc., 543 F.3d 710 (Fed. Cir. 2008).174. Id.175. See, e.g., Manzullo & Michaud: New Patent Bill Encourages IP theft, Destroys American

Jobs, http://manzullo.house.gov/News/DocumentSingle.aspx?DocumentlD=113152 (last visitedApril 3, 2009) (US Representative Don Manzullo, commenting that the patent reform bill wouldweaken IP protections by limiting damage awards in patent infringement cases); See also, RickMerritt, Damages key to patent reform debate, EE TIMES, March 3, 2009, http://www.eetimes.com/news/latest/showArticle.jhtml?articlelD=215800319 (commenting on the patent reform bill, thedebate on damages, the possibility of giving judges more latitude to instruct juries on how to reach adamages settlement, and bringing the United States to a first-to-file system).

176. White House, The Technology Agenda, Improve America's Competitiveness,http://www.whitehouse.gov/agenda/technology (last visited April 3, 2009).

177. See, e.g., Dennis Crouch, Patent Reform Act 2009, PATENTLYO, March 3, 2009,http://www.patentlyo.com/patent/2009/03/patent-reform-act-of-2009.html.

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RECENT DEVELOPMENTS [N PATENT LAW

file and post-grant oppositions. 178 Patent reform legislation has beenintroduced to the current Congress, and hearings have been held on thecontroversial issue of damage apportionment 79 It is possible that patentlaw is in for great changes in 2009. °

178. Id.179. See, e.g., Donald Zuhn, Senate Judiciary Committee Holds Hearing on Patent Reform,

PATENTDOCS, March 10, 2009, http://www.patentdocs.org/2009/03/senate-judiciary-committee-holds-hearing-on-patent-reforrn.htmi (referring to testimony heard on the proposed patent reform).

180. See, e.g., Kevin Noonan, Senate "Patent Reform" Bill (S. 515) Voted out of JudiciaryCommittee, PATENTDOCS, April 2, 2009, http://www.patentdocs.org/2009/04/senate-patent-reform-bill-s-515-voted-out-of-judiciary-committee.html (Bill S. 515 was voted out of the Senate JudiciaryCommittee on April 2, 2009, albeit around much controversy and dissention).

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Recent Developments in Patent Law